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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: George A. Roberts who wrote (127658)	5/21/1999 2:09:00 PM
From: Chuzzlewit	Read Replies (3) \| Respond to of 176387

George, there are a few problems with your conclusions. The most obvious is that you are ignoring the affect of interest rates. A low interest rate environment drives stock prices up -- there is no magic here. How else do you explain the fact that the S&P500 has a consensus annual growth rate of only around 9% according to analysts, but has a P/E multiple of around 30x when I checked last? Second, analysts are notoriously myopic. The focus tends to be too much on the near term, and what the analysts seem to be focused on now is the decrease in Dell's gross margin. It dropped by almost 1%. Taken in a vacuum, this kind of news would look quite negative, but if you view this in a larger strategic sense it is not negative at all. I view it as reflective of a strategy designed to gain market share at the expense of the more marginal players, which, if successful, could lead to the decision by one or more of them to drop out of the business. Remember, Dell has a significant cost advantage over its competitors. If you were a chess player you might view this as a positional sacrifice -- one in which you give up some material advantage (in this case short term profit) in hopes of reaping a huge material advantage down the road (forcing the weak out of the game followed by increasing margins resulting in huge profit increases in the future). Finally, Dell is sitting on a very large cache of cash. I think it is entirely possible that Dell will break its mold and make a strategic acquisition that could well provide the growth engine for renewed hypergrowth. I continue to stand in awe of Dell's superb financial management. The fruits of creating a cash generating machine capable of sustaining hypergrowth will be felt when Dell unveils its plans for extending its "virtual integration" model into new market niches. ****** OT To my many friends on the thread: I am happy to tell you that my wife's surgery went well. She is expected to remain in the hospital until Tuesday, and recovery is proceeding according to plan. We expect that she will require another 6 - 7 weeks for full recovery. I have received so many PMs expressing kind thoughts and prayers that it was impossible for me to respond. So instead of responding to them individually I want to thank the thread here for all of the wonderful sentiments you have expressed. I have printed them out for her, and they adorn her hospital room. Thanks to all of you. It means a lot to us. TTFN, CTC